NEW YORK (Reuters) - Americans’ outlook on the economy and their finances took for turn for the worst in early December due likely to anxiety about higher taxes from the budget stalemate in Washington, a survey released on Friday showed.
The Thomson Reuters/University of Michigan’s preliminary reading in the overall index on consumer sentiment plunged to 74.5 in early December, the lowest level since August.
It was far below November’s figure of 82.7 and the median forecast of 82.4 among economists polled by Reuters.
GUY BERGER, ECONOMIST, RBS SECURITIES, STAMFORD, CONNECTICUT:
“It’s a disappointing and surprising number. A very large plunge. It looks similar to what was going on in the summer of 2011 when the debt ceiling crisis was reaching a fever pitch. And it looks like this might be what is going on here.
“Consumers’ views about their present situation are not getting worse, but they are more pessimistic about the future. There’s a lot of uncertainty going forward.”
IAN LYNGEN, SENIOR GOVERNMENT BOND STRATEGIST, CRT CAPITAL GROUP, STAMFORD, CONNECTICUT:
“Consumer Confidence dropped to its lowest level since August, unexpectedly falling to 74.5 versus 82.0 consensus and 82.7 in November.
“Overall, a weaker release with inflation forecasts creeping higher. Treasuries are doing very little with the release, retaining the weakness seen in the wake of the higher-than-expect non-farm payrolls release this morning.”
CAREY LEAHEY CHIEF U.S. ECONOMIST AT DECISION ECONOMICS IN NEW YORK
“As you know the number is very disappointing, it reversed all the gains of the last few months. We’re now well below 80 again, not a good sign. It maybe a sign that the average American is at least implicitly seeing the worries of the fiscal cliff so the only good thing from the number is, it might persuade our friends in the Beltway to get in gear.”
“The market is going to act as if it is, and take this as the first tangible sign that the cliff is affecting household attitudes.
“The Federal Reserve analyzes this report to death, they are going to be very, very concerned. That’s going to be a big discussion point at their meeting next week.”
TOM PORCELLI, CHIEF U.S. ECONOMIST, RBC CAPITAL MARKETS, NEW YORK
“It seems that the average household is now paying attention to the fiscal cliff and that is the key takeaway from this report. In recent months it surprisingly held up well even with the fiscal cliff headlines, but with the media picking up on the fiscal cliff even more people are now paying attention to it and the pullback in confidence is a reflection of that.”
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Americas Economics and Markets Desk; +1-646 223-6300